The state of Maryland this spring announced that one of its public agencies would save up to $15 million a year on its electricity bill as a result of buying cheaper electricity in the competitive market. Gov. Martin O'Malley was rightfully ecstatic, proclaiming that "the state is leveraging its electricity buying power to provide a much needed measure of price stability and protection."
Maryland taxpayers should be heartened by the governor's pronouncement. States across the country are facing significant budget challenges, so any opportunity to save taxpayer money and buy cheaper electricity should be welcomed.
What is surprising is that the administration and some legislators don't agree that average Maryland consumers - many of whom are facing their own financial challenges - should have the right to buy electricity on the competitive market, just as the state and many businesses are successfully doing.
The irony cannot go unnoticed. Just days before this announcement, the governor and some lawmakers in the General Assembly tried hard to close the door forever on competitive electricity markets in Maryland by proposing legislation to re-regulate electricity rates. What was so proudly embraced for a state agency - the right to shop for the lowest electricity price - would have been banned for Maryland consumers had the legislature passed a re-regulation bill. Fortunately, it didn't.
Since then, however, the governor has made clear his intention to again seek re-regulation in the 2010 session of the Maryland General Assembly.
Not only would re-regulation legislation preclude residential customers from access to the c ompetitive marketplace, it would likely dampen the existing competitive market by discouraging private-sector investment in new generating facilities and in renewable energy resources that the state is seeking to cultivate for the future.
The electric restructuring that occurred years ago in Maryland allows the government and others to negotiate the least expensive electricity rates they can find in the marketplace. Because of this restructuring, more than 70 percent of Maryland's business and governmental customers now buy electricity from a company other than their local utility, and they have saved millions of dollars doing it.
Don't take my word for this; look at the facts from just these few customers:
• The Maryland Department of General Services has saved $50 million since 2004.
• The Baltimore Regional Cooperative Purchasing Committee has saved $30 million since 2006.
• The Eastern Shore Educational Consortium has saved $7 million since 2001.
• Five members of the Apartment and Office Buildings Association have saved $10.6 million for 2007-2008.
While electric restructuring was an important first step, there is still work to do. Instead of trying to eliminate choices for Maryland consumers, state policymakers should encourage more choices for customers to shop for electricity.
Across the border in Pennsylvania, in areas like Pittsburgh, where multi-year rate freezes have expired, almost a quarter of all residential customers shop for electricity. Millions of residential customers across America shop for the best value in the electricity markets. And the numbers are growing every day.
The bottom line is this: The energy savings the state of Maryland secured for itself are substantial and make for good fiscal policy. Maryland consumers should not be barred from enjoying the same benefits.
Donald C. Fry is the president and CEO of the Greater Baltimore Committee. His e-mail is donaldf@gbc.org.
– June 26, 2009
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